Permanent Transfers - a growing trend

As companies seek flexible and cost-effective alternatives to traditional long-term assignments to mobilise their staff, the use of permanent international transfers has increased. A recent ECA survey found that nearly two-thirds of companies saw an increase in the number of permanent transfers as a proportion of all their international moves in the last three years. They also expected the proportion to continue increasing going forwards.

The relative cost-effectiveness of permanent transfers compared to other assignment types is driving the trend. Transferees are most commonly paid a host-based salary and fewer of the additional benefits and allowances that are typically paid to assignees. However, while permanent transfers may appear to be cheaper than assignments on paper, around half of the companies surveyed reported that ensuring the salary package was competitive enough to encourage mobility presented a significant challenge. Where the employee is not sufficiently motivated by the career opportunity on offer or a personal desire to move abroad, companies need to be flexible and allow further incentives, which increase the cost. Rather than replacing other assignment types completely, permanent transfers are often most effectively used alongside other mobility policies, with different approaches used to suit different mobility scenarios.

While flexibility is important, almost half of companies have no policy for their permanent transfers at all, significantly higher than the number of companies with no long-term assignment policy. In fact, a similar proportion of companies do not involve their global mobility team in managing permanent transfers at all, which may explain why applying policy consistently and managing employee expectations are also cited as major challenges when managing permanent transfers. Although companies want to use permanent transfers because of their cost-effectiveness, an inconsistent approach where packages are essentially negotiated with the individual can lead to unnecessary expenditure which erodes that advantage.

As the use of permanent transfers grows, we expect companies increasingly to depend on the expertise of their global mobility teams to administer them and that they will need structured yet flexible policies in place to do this effectively. Our Permanent Transfers survey, highlights of which are shown below, identifies trends and best practice in compensation and benefits for this kind of mobile employee, including differences between employee- and company-initiated transfers. As always, ECA’s consultants are also on hand to help you develop or review your permanent transfers policy according to your specific needs and in line with best practice.

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ECA's Net-to-Net Calculator provides the information you need to negotiate and explain a local salary offer to your employees. It applies ECA’s dependable tax data to your gross salaries to compare the net salary of a local package against the net salary of a home-based package, helping you to quickly assess the suitability of a local salary and the adjustment required, if any, to deal with any shortfall. Contact us for a demonstration of the tool or for our team to carry out a calculation for you.